Budgets are collections of numbers which, added up, are statements about priorities. Unfortunately, the proposed federal budget released today by President Bush adds up to a profound insensitivity to the challenges facing working families in New Jersey and the nation, a failure to recognize a national health care crisis demanding systemic reform -- and a continued call to reduce what the wealthiest Americans pay toward a functioning society.

Here's an initial take on some major implications of the President's Fiscal Year 2009 spending proposal.

The President giveth and the President taketh away

President Bush has said he agrees the economy is deteriorating and that a stimulus package including tax rebates for moderate and low income families is needed. But the budget he submitted today would hurt the very people who suffer most in a recession, even many of those who would get rebates.

The stimulus package Bush and the House agreed to (the Senate is working on its own version) could give up to $1,800 to a working family with two children. But that same family could easily end up losing more because of budget cuts than it gains from a rebate. That's because the proposed budget reduces funding for such critical programs as the Low Income Home Energy Assistance (minus $570 million), Social Services Block grant ($500 million), job training ($484 million), Housing for Persons with Disabilities ($77 million), Housing for the Elderly ($190 million) and Public Housing ($115 million). It would eliminate the Community Services Block Grant entirely.

Further, President Bush proposes to reduce Medicaid by $18 billion over five years; that could reduce services to vulnerable persons. And a five-year freeze in discretionary non-defense spending he calls for would mean many other programs like child care would have to cut vital support services. Such spending reductions would come on top of the cuts the President insisted be made in the funding for 2008 in education, health, energy, Homeland Security and housing.

Making the wealthy wealthier at the expense of typical working Americans

The Bush budget extends the tax cuts he won in 2001 and 2003 tax cuts that are scheduled to expire in 2010. If these tax cuts and Alternative Minimum Tax relief are extended, but - as he proposes -- not paid for (through budget cuts or increases in other taxes), they'll add $4.3 trillion to the national debt over the next decade. This would seriously worsen already severe long-term federal budget problems.

And, the biggest tax cuts by far would continue to go to the people who need them least: the very wealthy. In 2010, for example, households making over $1 million a year would get an average tax cut of more than $150,000 each. So big are the tax cuts for high-income people that the top 1 percent of the population (those with incomes over $400,000) would get more in total tax cuts each year than the federal government spends on K-12 education or medical care for veterans.

The President's stated belief that extending his tax cuts would help the economy runs counter to studies by Congress's Joint Committee on Taxation, the Congressional Budget Office and the Brookings Institution. They've all concluded large tax cuts reduce economic growth over the long run if they aren't paid for. This is because large, persistent deficits act as a drag on the economy. As a study by Brookings Institution economist William Gale and then-Brookings economist (now CBO director) Peter Orszag concluded, making the 2001 and 2003 tax cuts permanent without offsetting their cost would be "likely to reduce, not increase, national income over the long run."

Missing the boat on health care costs

The Bush Administration aims to reduce federal health care spending by proposing almost $200 billion in cuts in Medicare and Medicaid, many of which will reduce benefits or increase costs for seniors, persons with disabilities and children. It's a shortsighted approach because rising health care costs aren't only a federal budget problem. They are part of a large national problem that has significant implications for state government spending as well.

With premiums for employer-based insurance more than doubling since 1997, working families are experiencing lower health coverage and higher medical costs. Many are forced to drop their coverage altogether. Experts agree that rising health care costs are also making American business less competitive internationally. Many small businesses are dropping their health insurance while large businesses significantly increase what employees have to pay.

Health care costs are now the largest component of state budgets. And help from Washington isn't coming: in the 2002 recession, states received fiscal relief in the form of higher, temporary federal Medicaid matching payments, but this time around President Bush opposes granting such relief again. And, his $18 billion in Medicaid cuts will likely shift those costs to the states at a time they can ill afford them. New Jersey's loss could be $510 million. As we've reported before, the President's insistence on cutting eligibility levels for State Children's Health Insurance Programs could mean that about 36,000 children whose families make well under $62,000 a year would no longer be eligible for New Jersey's FamilyCare program.

If there is good news about the President's budget proposal, it is that it is unlikely to be adopted. But the influence it has on shaping the debate to come gets things off to a discouraging start.

You can get more from the Center on Budget and Policy Priorities about the impact of the budget proposal and the skewed benefits of federal tax cuts.

TAX REFORM

WORK & WAGES

BUDGET & FISCAL POLICY

TRANSIT ISSUES

ECONOMIC DEVELOPMENT

VOTING & GOVT REFORM

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